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# Calculating net income and earnings after a stock split

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During the year ended December 31,2009, Gluco, Inc., split its stock on a 3-for-1 basis. In its annual report for 2008, the firm reported net income of \$3,703,920 for 2008, with an average 268,400 shares of common stock outstanding for that year. There was no preferred stock.
Required:
a. What amount of net income for 2008 will be reported in Gluco's 2009 annual report?
b. Calculate Gluco's earnings per share for 2008 that would have been reported in the 2008 annual report.
c. Calculate Gluco's earnings per share for 2008 that will be reported in the 2009 annual report for comparative purpose.

#### Solution Preview

During the year ended December 31,2009, Gluco, Inc., split its stock on a 3-for-1 basis. In its annual report for 2008, the firm reported net income of \$3,703,920 for 2008, with an average 268,400 shares of common stock ...

#### Solution Summary

In this solution the concept of earnings per share and net income are explored, with emphasis placed on what happens after the stock splits and how this information is reported on future filings.

\$2.19